The maximum quantum of business has come from the futures trade in farm items such as guar seed, soyabean, soy oil and mustard seed as well as commodities such as energy and crude oil

The turnover of 23 commodity exchanges surged by over 50% to Rs69.70 lakh crore till February of the current fiscal due to a sharp rise in participation of agricultural and other commodities, the Forward Markets Commission (FMC) has said.

The turnover of commodity bourses had stood at Rs46.40 lakh crore in the same period last year, it said.

The maximum quantum of business has come from the futures trade in farm items such as guar seed, soyabean, soy oil and mustard seed as well as commodities such as energy and crude oil, data released by commodity markets regulator FMC showed.

Among 23 commodity bourses, the country's leading exchange Multi Commodity Exchange (MCX)'s turnover soared by 42% to Rs57.70 lakh crore during April-February of FY10, against Rs40.60 lakh crore in the same period last year.

The business of the leading agri-commodity bourse National Commodity & Derivatives Exchange (NCDEX) rose significantly by 69% to Rs8.30 lakh crore from Rs4.90 lakh crore, while National Multi-Commodity Exchange of India Limited (NMCE)'s turnover scaled up by five-folds to Rs1.90 lakh crore from Rs39,625 crore in the review period, the data showed.

The new entrant, Indian Commodity Exchange (ICEX), made business of Rs1 lakh crore since the launch of the exchange on 21 November 2009. The turnover of regional exchange National Board of Trade has risen sharply to over Rs25,000 crore so far this fiscal.

Currently, there are four national and 19 regional exchanges in the country.
 

Industry body AMFI acknowledges rampant mis-selling of MF products; puts blame on distributors, ignoring the fact that poorly-performing products of AMCs, aggressively sold with all kinds of incentives, are really the cause of mis-selling

The newly-appointed chief executive of industry body Association of Mutual Funds in India (AMFI) is looking to hit the ground running. Within days of his appointment, he announced his intention to crack the whip on the blatant mis-selling of mutual fund products to retail investors. However, his ire has been misdirected towards distributors, largely ignoring the role played by asset management companies (AMCs) in pushing the distributors to sell products aggressively.

In a recent interview with Business Standard, HN Sinor, the new chief at AMFI, acknowledged that mis-selling runs rampant in the mutual fund industry and that small investors were being short-changed on a regular basis. Announcing that this situation needed to be addressed on a priority basis, he indicated that distributors engaged in mis-selling should be suspended from selling mutual fund products.

While it is heartening to see that the new chief of AMFI has taken up arms against mis-selling, it would be unfair to tie the noose around distributors’ necks. This is very simply because distributors don’t manufacture products. Neither are they responsible for shoddy performance of the majority of mutual fund schemes. If anything, it is the AMCs of mutual funds that are promoting mis-selling in a bid to generate more business. Distributors are merely being lured into the high-stakes game being played by such AMCs.

Moneylife has previously written (see here) about how large AMCs are wooing distributors to sell their products more aggressively by organising lavish junkets for those who meet their business targets. It is this aggression that may lead to mis-selling. Indeed, has anybody ever come across any mutual fund company pulling up any distributor for mis-selling? 

An independent financial advisor (IFA) who spoke to Moneylife on the condition of anonymity said, “The regulator gives a verbal indication of what the AMCs should pay to distributors but none of the AMCs follow that. AMCs are forced to lure distributors with upfront brokerage as high as 4% because of the changed rules of the game. After the new rule that payment of trail commission will go to the new distributor, competition for assets under management (AUM) shopping has become very intense. No distributor is certain of the trail commission coming to them. They want to earn future trail commissions upfront. It means there is no obligation or attraction for them to serve investors after the allotment. The new broker will also not service investors because he won’t get any trail commission which is already paid upfront.”

The irony is that if there is any segment of distributor that indulges in mis-selling it is the industry where Mr Sinor has worked for decades—the banking industry. “Banks mis-sell products involving large sums of money under false representation. They rely least on the strength of the product and requirement of investors. They are constantly abusing their trusted relationship with depositors. There is a need to regulate AMCs and bank distributors more,” he added.
Small distributors are also feeling the heat after the no-entry load ban imposed by SEBI last year. In such a scenario, they are under pressure from the large distributors who are leaving no stone unturned to grab their business from under their nose. In the race to fight for their very survival, small distributors are not thinking twice before selling fund schemes blindly to investors. It is time AMFI realised where the root cause of the problem lies. It has come under a lot of fire recently for being a toothless body with no concrete measures or actions for improving industry standards. It has largely done nothing significant to standardise any of the practices. Mutual fund prospectuses are a shame compared to the IPO prospectuses. If AMFI wants to bring about some positive changes, AMFI must look within. It has a lot in its plate to start with.
 

Domino's Pizza has said that within three years, its Indian operations would be among the top five global markets for the company

Quick service restaurant chain Domino's Pizza on Thursday said that within three years, its Indian operations would be among the top five global markets for the company, reports PTI.

"India currently is one of the fastest-growing markets for us and ranks among the top ten in our global list. Within the next three years, India will be among our top five markets," Domino's Pizza president and chief executive J Patrick Doyle told reporters in New Delhi.

Mr Doyle, global head of the chain, is on a visit to India. Today, he inaugurated the 300th outlet of the company in the country. The outlet in Delhi is also the 9,000th Domino's Pizza store globally.

"India currently contributes to around 1.5% to 2% of our annual global sales of $6 billion and we expect (a) substantial jump in it. Even during the economic recession, India was a growth story for us," Mr Doyle said.

With 65 new outlets this fiscal, he said, the company registered its biggest expansion in India among all its operations.

In India, the Domino's brand is operated by Bhartia Group-promoted Jubilant Foodworks under a master franchise agreement.